Chapter 9 - Flashcards
Define unemployment rate
The percentage of the labor force that is unemployed.
What is the unemployment rate calcuation
UnemploymentRate=
(NumberofUnemployed / Labour force) x 100
Define labour force participation rate
The percentage of the adult population that is in the labor force.
What is the labour force participation rate formula
(Labour force / adult population )x 100
What is the natural rate of unemployment
The normal rate of unemployment around which the unemployment rate fluctuates.
What are the components of the natural rate of unemployment
Structural unemployment and frictional unemployment.
What is cyclical unemployment
The deviation of unemployment from its natural rate, associated with business cycles.
What are the types of unemployment
- Frictional unemployment
- Structural Unemployment
- Cyclical unemployment
Define frictional unemployment
Short-term unemployment that occurs when people are between jobs or are entering the labor market for the first time.
What is the cause of frictional unemployment
job search time, geographic mobility, industry changes
Provide an example of frictional unemployment
A recent college graduate looking for their first job.
Define structural unemployment
Long-term unemployment that occurs when there is a mismatch between the skills of workers and the requirements of jobs.
What are the causes of structural unemployment
Technological changes, globalization, changes in consumer demand.
Provide an example of structural unemploymnet
Factory workers losing jobs due to automation.
Define cyclical unemployment
Unemployment that rises during economic downturns and falls when the economy improves.
What is the cause of cyclical unemployment
fluctuations in economic activity
what is an example of cyclical unemployment
increased unemployment during a recession
What ways do you measure unemployment
- labour force
- unemployment surveys
- discouraged workers
define labour force
The total number of workers, including both the employed and the unemployed.
What are the exclusions to the labour force
Retired individuals, full-time students, homemakers, discouraged workers.
What survey is used for unemployment and provide a definition
Current Population Survey (CPS): A monthly survey conducted by Statistics Canada to measure employment, unemployment, and labor force participation.
What is meant by discouraged workers
Individuals who would like to work but have given up looking for a job due to poor prospects.
What are the factors that affect the natural rate of unemployment
- job search
- minimum wage laws
- unions and collective barganing
- efficiency wages
5.
Why is job search a factor that affects the natural rate of unemployment
Time and effort required to match workers with appropriate jobs.
Define minimum wage laws
Setting a minimum wage can lead to higher unemployment if it is above the equilibrium wage level.
Define unions and collective barganing
Can lead to higher wages and lower employment in unionized sectors.
Define Efficiency wages
Employers may pay above-equilibrium wages to increase productivity, reduce turnover, and attract better applicants, potentially increasing unemployment.
What are the policies to reduce unemployment
- job training programs
- unemployment insurance
- job search assistance
define job training programs
Government programs to help workers acquire skills needed in the current job market.
Define unemployment insurance
Provides temporary financial assistance to unemployed workers, which can reduce the urgency of finding new employment but also support consumer spending.
Define job search assistance
Services to help match job seekers with employers, reducing frictional unemployment.
How does the impact of technological change affect unemployment
Technological advancements can increase structural unemployment as certain skills become obsolete.
How does globalization affect unemployment
Global competition can lead to job losses in certain industries but can also create jobs in other sectors.
How do economic policies affect unemployment
Expansionary fiscal and monetary policies can reduce cyclical unemployment during economic downturns.
